The alternative minimum tax (AMT) is a parallel tax system that ensures high-income taxpayers pay a minimum amount of tax, regardless of deductions and credits. The AMT is calculated by applying a flat rate to taxable income, with certain adjustments and exemptions. If the AMT is greater than the regular income tax, the taxpayer must pay the difference. Avoiding the AMT can save taxpayers a significant amount of money.
There are several strategies that can be used to avoid the AMT, including: